SikobaPay users are strongly encouraged to grant credit lines only to users (individuals and companies) they know and trust personally. For that reason, we have made the choice to not measure creditworthiness as such, because it might encourage some SikobaPay users to give credit lines to users whom they do not actually know, just because of their credit rating. This would go against the Sikoba philosophy - although we will of course have no way of controlling actual user behaviour.
That said, SikobaPay will flag users who do not discharge their obligations, and we may introduce a simple rating system based purely on the credit lines a user is given by other users - which reflect the combined trust of other users.
Remember that in the SikobaPay, a user will only ever have exposures to users to whom he or she has explicitly given credit. To give an example: if Bob trusts Alice, and Charles trusts Bob, and Bob allows what we call “credit conversion” for Alice, then Alice can pay Charles. However, Charles will only see Bob as his counter-party, and not Alice.
No, you do not need a bank account. You can simply join the network, find other users whom you know or already do business with, and start accepting their credit. You can also contact them and ask them to accept your credit. And if you own crypto-assets, you will be able to use them in the sikobaPay. This will give you access to most of the functionalities of the system.
However, some functions will be available only to users who have gone through sikobaPay’s KYC process. These users will be able to interact with banks in the system, which will allow them to use additional functionalities which will be almost like having a normal bank account.
SikobaPay is just a platform for making payments using IOUs - it is up to the users to manage their tax and accounting. This should be compared to the way the banking system works, where banks hold funds and make payments on behalf of customers without being involved in tax and accounting issues.
We will support the world’s major currencies, such as USD, EUR, CNY, JPY and GBP. Crypto-currencies (e.g. bitcoin) as well as commodities may also be supported at some stage. In addition, groups of users can create their own currencies that will be equivalent to local currencies.
Yes, there will be fees that will mainly serve to remunerate the members of the Sikoba Federation who run the Sikoba nodes. These fees will be paid using Sikoba tokens that will be native to the sikobaPay.
Note that each user will be able to have a small overdraft in his Sikoba token account. That way, new users can start transacting even without having bought any tokens.
In most cases, we expect sikobaPay fees to be extremely low compared to bank fees.
However, you need to remember that credit conditions between users may be ruled by “credit scripts” of almost arbitrary complexity and that a payment may involve a chain of such credit relationships. Fees will need to reflect that. This will be similar to gas costs in Ethereum, where transactions involving complex smart contracts cost more gas than those with simple smart contracts.
Finally, some transactions will require interfacing with the financial system, such as foreign exchange operations or withdrawals of fiat to a bank account. These transactions will incur fees at levels similar to the ones that a competitive bank or forex broker would charge.
There will likely be a demand for fiat money from SikobaPay users, in particular to settle outstanding IOUs inside the SikobaPay rather than outside. We therefore aim to have banks and/or payment service providers join the SikobaPay to provide an interface to the world’s financial system. Although there will be obvious regulatory hurdles to overcome, we hope that the opportunity to earn fees on fiat deposits and withdrawals, and on forex, will provide a sufficient incentive.
Users will have to deal with defaults outside of the SikobaPay, although SikobaPay will flag users who do not meet their obligations. The advantage of using the app is that creditors will have strong proof that an obligation exists.
The Sikoba project is not some kind of crusade against banks, and it does not aim to replace banks. It is about bringing credit back to its rightful place in the financial system, alongside bank money.
We would not necessarily call it an “experiment”, given that credit (in the classic meaning of the term) has been used in business since time immemorial and continues to be used widely today - even though nowadays its use is somewhat eclipsed by the omnipresence of banking. When a company sends out an invoice to a client, a debt is created and a credit relationship exists until the day the client pays. In Germany, until a few decades ago, promissory notes (“Wechsel”) were still routinely used by businesses - until bank credit became more easily accessible. And all over the world we still find examples of business networks transacting with credit rather than bank money - even in Europe.
Sikoba will be built on blockchain technology, which provides a tamper-proof digital ledger and accounting of transactions. All transactions are validated and verified. Once verified, they become permanent and unalterable. The Sikoba nodes will be run by know and trusted parties selected by the Sikoba users themselves. The groups or entities running these nodes will have incentives against cheating, for example via a goodwill deposit of assets. We may also require them to sign legally binding contracts so that attempts to cheat would have legal consequences.
The tokens will be used to pay for commissions on the Sikoba network. This will be similar to how ETH is used to pay on the Ethereum network. Therefore, this will not be a stake in the company. Sikoba (the company) will develop and “incubate” Sikoba (the network) and then let it loose as an independent, decentralised, self-organising entity. The long-term value lies in the network much more than in the company.
SikobaPay is not a peer-to-peer lending platform! It is a peer-to-peer IOU platform, that allows payments to be made without having money (whether fiat, crypto or any other asset) to begin with. The way it works is that you grant other users, whom you know personally, credit on certain terms that you yourself specify. These users can then pay you by drawing on that credit. Fiat, crypto or other assets can still be used for payment, for example if payment by IOU is not possible or not desired. Also, fiat or crypto may actually be required to repay debt. For both practical and philosophical reasons, this is not intended to be, or ever become, a pure IOU system.